Saudi long bond shines in volatility after Trump win

Dubai—Saudi Arabia’s 30-year bonds are outperforming other Gulf debt during volatility triggered by Donald Trump’s election as U.S. president, a sign of unsatisfied demand for Saudi debt and a good omen for issuance expected from Riyadh next year.
The week to Nov. 16 saw the largest outflows from emerging market debt on record, according to Bank of America Merrill Lynch, partly because Trump’s election fuelled expectations of inflationary economic policy and higher U.S. interest rates. The $17.5 billion of paper which Riyadh issued last month, in its first international sovereign bond sale, was initially hit hard. The 2046 tranche sank to 90.5 cents on Nov. 14 from 98.1 cents on Election Day, Nov. 8.
But Saudi 30-year bonds have since bounced back, to 95.6 cents, outperforming Qatari debt, which was previously seen as the benchmark for 30-year bonds in the Gulf. “The bond is still trading very tight, and very tight to Qatar too, even tighter than before the Trump win,” a London-based trader said of Saudi 30-year bonds, which have also outperformed U.S. Treasuries. Their yield is up 16 basis points since the U.S. election, compared to a rise of 37 bps for the 30-year U.S. Treasury .
“We are seeing capital outflows from emerging market debt, but Saudi is not hit by it,” said a Dubai banker, adding that there was strong demand from Asian banks for the longer bonds. Shorter-term Saudi bonds have also outperformed, to a lesser extent. Saudi Arabia’s 10-year paper is at 95.3 cents against 98.4 cents on Nov. 8; Qatar’s 2026 notes are at 97.7 cents against 101.3 cents.— Reuters